Biz: Don't go overboard on sanctions

Business groups representing many of the largest U.S. corporations are urging policymakers to tread softly when crafting sanctions on Russia, raising concerns that overly aggressive measures could fray lucrative relationships with the Kremlin or provoke retaliation by Moscow.

No individual company contacted by POLITICO acknowledged lobbying on the issue. But people knowledgeable about the discussions said several multi-industry organizations are privately reaching out to policymakers — including the National Association of Manufacturers, the U.S.-Russia Business Council and USA Engage, a group that fights unilateral sanctions because of their impact on U.S. business activities in foreign countries.

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Companies with potential stakes in the issue range from ExxonMobil to Boeing to PepsiCo, all of which have sizable business interests that could be interrupted if either country takes draconian action in the Ukraine crisis. Members of one bilateral trade group, the U.S.-Russia Business Council, include some of the biggest names in corporate America, such as Microsoft, General Motors, Citi and Coca-Cola.

Blake Marshall, senior vice president of government relations at the international communications firm PBN Hill+Knowlton Strategies, said companies have “two overarching concerns” about sanctions — a desire that they be “targeted very specifically” and that they “not be unilateral, which is really one of the fundamental principles that calls into question their ultimate effectiveness.”

Unilateral action by the U.S. could cede market share to European or Asian competitors, said Marshall, whose firm specializes in Russia and Ukraine.

U.S. companies invested $14.07 billion in Russia in 2012, according to the Commerce Department’s Bureau of Economic Analysis, and some corporations’ reliance on business with Russia has expanded in recent years.

Exxon, which declined to comment on its lobbying activities, has secured a multibillion-dollar oil exploration deal with Russian state-run oil company Rosneft. Boeing has spent about $7 billion in Russia since 1991, according to The Wall Street Journal, and the company plans to boost that amount to $27 billion by 2021. And Russia is PepsiCo’s second-biggest market, behind the United States, accounting for nearly 8 percent of the company’s $66 billion in sales in 2013, according to recent filings with the Securities and Exchange Commission.

Tennessee Sen. Bob Corker, the top Republican on the Foreign Relations Committee, said attendees at last weekend’s American Enterprise Institute World Forum in Georgia raised concerns with him about potential sanctions against Russia. But he said he has not personally been lobbied by U.S. corporations.

“That issue was brought up, that we need to be thoughtful about how we do these things,” Corker told POLITICO on Wednesday. “Somebody raised the point that we need to be sure we don’t cut our nose off to spite our face.”

Other committee members, including Sens. Barbara Boxer (D-Calif.) and Tom Udall (D-N.M.), also said they hadn’t heard from big U.S. firms about the Ukraine bill. But Boxer said she fully supported the panel’s legislative package responding to the crisis.

The committee approved an aid and sanctions package Wednesday that would block assets and revoke visas of officials responsible for disrupting Ukraine’s sovereignty as well as those who perpetrated “gross human rights abuses” against anti-government protesters in the eastern European country. The vote comes after the House passed a narrower bill last week to provide loan guarantees to the new Ukrainian government, and the White House released an executive order last week that lays the groundwork for visa restrictions and sanctions targeting Ukrainian and Russian nationals who are deemed responsible for the crisis.

None of those steps would threaten a broader breaking of trade relations between the U.S. and Russia.

So far, many business groups are happy with the direction the Obama administration and Congress are going.

“The U.S. business community appreciates the circumspect approach of officials in the administration and Congress to the question of sanctions in response to recent events in Ukraine,” said Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce.

But the groups worry about the impact of the future sanctions that could come if the tension in Ukraine escalates.